Posts Tagged ‘oil’

Update: One lesson learned – not to trade when you are tired and not focused. I bought the opinion on oil because I thought the Change in EIA Oil Inventories is going to be published. But this one was yesterday… today there was the Natural Gas… stupid mistake!

1) Weekly USD/JPY 20/08 8800 call. Opened price: 20.5 why? because I do believe it is near bottom and 20/8 gives some time to recover.

2) Daily oil 8060 put opened price: 5.9 why? Change in EIA Natural Gas Inventories will be announced in 40 minutes. The black gold tends to react strongly in the 30 minutes after.

After a big drop yesterday the market is calm down a bit but I fill it is the quiet before the storm. It is 30 minutes before the opening in US and you can feel that everyone is waiting to see how the market in the states react to the Dubai news.

That’s why I had a quick trade today on Rio Tinto and run a way after a quick profit. I know bought it at 3040 and sold it on 3060. I know it could easliy end the day around 3200 but on the other side it can finish around 2900. Yes I can use a stop loss but if I need to carry the trade to next week the stop loss could worth nothing if the market opens sharply lower.

It is the same with oil and EUO/USD… I am waiting to see. No mater what I won’t trade in the first half hour. If by then I will see a sharp move I may jump on the train (hopefully it would not be too late!)

For the last few weeks oil (light crude) is running between $77-$80 which gives nice setup for trading. I’ve played several time in this range and it worked quite well.

Yesterday I had an order to buy the black gold at $77. I woke up in the morning to see that I am in.
By 10:00 I was 50 points up so I moved my stop loss to 77.02. I was stopped out.
I was upset to see it up again to 77.50 and I put another order to buy it at 77. Soon I was in again but this time I was caching a falling knife. Before I knew it the oil was at 76. Few minutes after it was 75.55 my stop loss was at 75.40 and it seems very close.

It recovered a bit back to 76.10 just to go back to 75.80. Today it was the same story. Recover a bit to 76.20 just to move back to 75.80.
I was waiting for the US inventory data praying that I won’t stopped out. Minute before 15:30 the contract touched 75.49 and I though that I need a really good data to bail me out.

The data was a bit better than expected so the oil recovered. First to 76 and then to 77. Using the Euro gain against the Dollar the oil rose to 78 and I closed my position. What a roller coaster!

What I’ve learned from that? to use my brain more. It is good point to buy at 77 but first let it fall below then I should buy it on the way back. Lesson learnt.

After the big fall of the British banks, the oil companies have much more influence on the FTSE 100. This means that the $ against the £ and oil prices set the tone on the index.

Today the oil jumped 9% and the GBP/USD is 1.41 if the oil and the $ can keep this level I would say that the FTSE 100 can go back to 4000 mark very quickly. And in my opinion the oil price on the long run will go up. After all as far as I know it is the most needed commodity and although the green revolution there isn’t any decent substitute to the black oil. So perhaps the FTSE 100 is not all gloom and doom after all.

I’ve bought yesterday another oil share – Royal Dutch Shell I am following this share for long time and I’ve told to myself that if it goes below £15 to I would buy it. And this is what has happened on Friday. I’ve bought it at 1482 for long investment.

The good thing about the current economic crices is that you can find good companies cheap. The way I see it is that we are not at the bottom yet but we are not so far from there. So I rather start and buy shares that I’ve wanted for long time in cheap price. Other companies that I am looking to buy are Tesco, Google, Microsoft, BA & BT. All of them are closing down to the price that I would consider buying them.

Royal Dutch Shell just did it on Friday and I am quite happy that they are now part of my protfolio.

At the moment the price for Oil light crude (Feb) is $37.8 if it touches the 35.5 I am in! Buying of course…